§ 1. Mr. Greenwayasked the Chancellor of the Exchequer how many people have been taken out of taxation since May 1979; and if he will make a statement.
§ The Minister of State, Treasury (Mr. Peter Brooke)Some 1.4 million people would still be paying tax today had we simply increased the 1978–79 tax allowances in line with inflation; they now pay no income tax at all.
§ Mr. GreenwayI congratulate the Government on this excellent fact. Will my hon. Friend confirm that the Government aim to take more people out of taxation? Should this not be contrasted with the numbers who would be taken into taxation if public expenditure were increased by £28 billion, forcing the standard rate of income tax up to 53p in the pound, which is what the Labour party proposes if ever it wins power again?
§ Mr. BrookeIt would he wrong for me to anticipate my right hon. Friend the Chancellor, but it would be in the spirit of what he has achieved so far if more people were taken out of income tax. As to the increase in public expenditure of £28 billion, it has been said by the Labour party that it would only tax the top 5 per cent. It has also been said, out of Sheffield, that to say that Labour would tax only the top 5 per cent. would be dishonest.
§ Mr. Willie W. HamiltonIs it not the case that since the Government came into office in 1979 the total tax burden hs increased from 38 per cent. of GNP to 44 per cent. now, and that a recent report of the OECD showed that our tax burden is now heavier than that of most industrial countries in the West?
§ Mr. BrookeThe hon. Gentleman is correct to say that taxation as a percentage of GNP has increased, but that is why the Government intend to reduce it.
§ Mr. Brandon-BravoIn this debate, should we not also consider the impact of personal allowances? Am I not right in saying that while our personal allowances are similar to those of our major competitors, our basic rate of tax is higher?
§ Mr. BrookeMy hon. Friend is correct. My right hon. Friend the Chancellor has shown a balance between real increases in allowances with cuts in the basic rate of income tax.
§ Mr. Donald StewartDoes the Minister accept that in evidence it is necessary to tell not only the truth but the 1068 whole truth, and while we may take some satisfaction in the numbers that are being taken out of income tax, that cannot be dealt with in isolation? Which Government put a standard rate of 15 per cent. VAT on the vast majority of goods and services?
§ Mr. BrookeIt is true that, in line with the policy of moving the burden of taxation from direct to indirect, the previous Conservative Administration discharged that task.